- Title: ECB says ample stimulus still needed to support economy
- Date: 16th July 2020
- Summary: FRANKFURT, GERMANY (JULY 16, 2020) (REUTERS) WIDE ELECTRONIC BOARD WITH DAX CURVE VARIOUS OF TRADER ELECTRONIC BOARD SHOWING CHANGES IN DAX TRADER ELECTRONIC BOARD SHOWING AUTOMOBILE SHARES VARIOUS OF ELECTRONIC BOARD SHOWING DAX CURVE TOP SHOT TRADING FLOOR
- Embargoed: 30th July 2020 14:49
- Keywords: ECB climate interest rates protest stock exchange
- Location: FRANKFURT, GERMANY
- City: FRANKFURT, GERMANY
- Country: Germany
- Topics: Economic Events
- Reuters ID: LVA004CN265QL
- Aspect Ratio: 16:9
- Story Text: The European Central Bank defended its huge pandemic stimulus package on Thursday (July 16) and said it expected to have to use the full amount of planned debt purchases to help the euro zone stay afloat during a lockdown-induced recession.
Tackling the biggest economic collapse in living memory, the ECB is buying massive amounts of debt and paying banks to lend out its cash in an effort to salvage the bloc's economy until Europe is ready to reopen after the coronavirus lockdowns.
ECB President Christine Lagarde told a news conference that results so far showed its package was working and that further "ample stimulus" was needed to counter high uncertainty around efforts to combat the virus and mitigate the economic impact.
"Unless there are significant upside surprises, our base line is that we will need the entire envelope of PEPP," she said of the 1.35 trillion euros worth of planned debt purchases in its so-called Pandemic Emergency Purchase Programme.
"It's effective, adequate and it's working," she said.
Earlier, the ECB Governing Council kept policy on hold after a recent string of more positive economic data that followed a double-digit fall in output in the three months to June.
ECB policymakers may have also wanted to keep up pressure on European Union leaders to finally agree on long-delayed fiscal support, thus reducing the burden on monetary policy alone.
"It is important for European leaders to quickly agree on an ambitious package," Lagarde noted on the eve of a Brussels summit where leaders will attempt to bridge national differences on a new 750-billion-euro scheme of EU grants and loans.
Rising coronavirus case numbers around the globe are also likely to weigh on consumer and business confidence, holding back spending and investment and raising the chance that any recovery would be slow, uneven and prone to interruptions.
With exports, industrial production and confidence indicators still muted, economists say that the ECB's pause is only temporary and more action could come this autumn.
Lagarde said that despite evidence of a "bottoming out" in April, there remained high uncertainty about the ability of authorities to contain the spread of the virus and to counter the impact on incomes, employment and consumer demand.
PEPP purchases are due to continue until at least June 2021, with proceeds from those purchases to be reinvested until the end of 2022, she said.
(Production: ECB, Hakan Erdem, Ute Swart)
- Copyright Holder: REUTERS
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